Cash crisis brings real estate market to a grinding halt in Indore

The secondary or resale property market in Indore has been adversely impacted by the demonetisation of the old Rs 500 and Rs 1000 banknotes as people are short of cash, while the impact on new projects will be visible from the next financial year, say experts.

The resale of property, where the payment is partially done in cash, has almost come to a halt.(Pic for representation)

The secondary or resale property market in Indore has been adversely impacted by the demonetisation of the old Rs 500 and Rs 1000 banknotes as people are short of cash, while the impact on new projects will be visible from the next financial year, say experts.

Property prices are more or less stable for now.

“The secondary property market in the heart of the city has been hit as prices are more than the guideline rates. However, there has been little impact on the outskirts, where prices are below the guideline rates and there is no cash component involved. As for new projects, the impact will be visible only after April 30,” Confederation of Real Estate Developers Association of India (CREDAI) Indore executive body member Vijay Gandhi told HT.

The resale of property, where the payment is partially done in cash, has almost come to a halt. “There is a lull after the government’s decision to withdraw Rs 500 and Rs 1,000 notes. Usually, the resale of property involves cash component of around 30-40%. Even taking into account home loans, it is not possible for many buyers to pay entirely by check. We expect the resale property market to remain subdued for the next 12 months,” said a property broker, requesting anonymity.

Some developers and property dealers in the city are a worried lot after the demonetisation as they were already grappling with slow sales and rising inventory levels.

“Given the uncertainty caused by demonetisation, people could postpone their plans to buy property. It remains to be seen whether the rise in inventory levels will lead to a fall in prices,” Indore Property Dealers Association president Rajendra Bhaiya said.

Builder Naveen Mehta, however, feels that the demonetisation will not have a serious impact on new projects and says it will benefit the end users.

Property market in Indore had been showing signs of revival during the Diwali season, just before the Centre announced the demonetisation. The outskirts of the city including the Ring Road, Bypass Road and the Super Corridor are witnessing more development due to the high property prices in prime localities and the shortage of land for construction activity. While land comes at a rate of Rs 10,000-Rs 12,000 per square feet in the city, it drops to around Rs 800-2,500 per square feet on the outskirts of Indore.